EX-99.2 3 a10-21699_1ex99d2.htm EX-99.2

Exhibit 99.2

 

SEALY CORPORATION

UNAUDITED PRO FORMA FINANCIAL INFORMATION

 

On November 18, 2010, Sealy Corporation (the “Company”) divested the assets of its European manufacturing operations in France and Italy which represents its Europe segment.  The unaudited Pro Forma Condensed Consolidated Statement of Operations for the years ended December 2, 2007, November 30, 2008 and November 29, 2009 and for the nine months ended August 30, 2009 and August 29, 2010 set forth below have been presented after giving effect to the disposition as if it had occurred at the beginning of the periods. The unaudited Pro Forma Condensed Consolidated Balance Sheet set forth below has been presented after giving effect to the sale of the Europe segment as if it had occurred on November 29, 2009.

 

The following unaudited pro forma information assumes that the divestiture of the Europe segment occurred as of the beginning of the period. The adjustments to historical financial statements consist primarily of adjustments to exclude revenues, costs, assets and liabilities relating to the Europe segment. This unaudited pro forma information should not be relied upon as necessarily being indicative of historical results that would have been obtained if the disposition had actually occurred on that date, nor of the results that may be obtained in the future.

 


Exhibit 99.2

 

The unaudited Pro Forma Condensed Consolidated Statement of Operations for the years ended December 2, 2007, November 30, 2008 and November 29, 2009 are as follows:

 

 

 

Twelve Months Ended 
December 2, 2007

 

Twelve Months Ended 
November 30, 2008

 

Twelve Months Ended 
November 29, 2009

 

 

 

As Reported

 

Adjustments

 

Pro Forma

 

As Reported

 

Adjustments

 

Pro Forma

 

As Reported

 

Adjustments

 

Pro Forma

 

Net sales

 

$

1,702,065

 

$

140,325

 

$

1,561,739

 

$

1,498,023

 

$

148,740

 

$

1,349,283

 

$

1,290,064

 

$

111,600

 

$

1,178,464

 

Cost and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

994,700

 

106,725

 

887,975

 

915,977

 

116,951

 

799,026

 

773,279

 

83,535

 

689,743

 

Selling, general and administrative

 

545,608

 

37,420

 

508,188

 

482,566

 

36,256

 

446,310

 

416,420

 

32,284

 

384,136

 

Asset impairment loss

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

Goodwill impairment loss

 

—

 

—

 

—

 

27,475

 

24,644

(a)

2,831

 

1,188

 

—

 

1,188

 

Amortization expense

 

3,356

 

3,070

(b)

286

 

3,692

 

3,403

(b)

289

 

3,308

 

3,022

(b)

286

 

Restructuring expenses and asset impairment

 

—

 

—

 

—

 

3,126

 

—

 

3,126

 

1,256

 

—

 

1,256

 

Royalty (income) expense, net

 

(18,562

)

—

 

(18,562

)

(17,327

)

—

 

(17,327

)

(16,442

)

—

 

(16,442

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

176,963

 

(6,890

)

183,853

 

82,514

 

(32,514

)

115,028

 

111,055

 

(7,241

)

118,296

 

Interest expense

 

63,976

 

1,526

(c)

62,450

 

60,464

 

2,264

(c)

58,200

 

79,092

 

1,245

(c)

77,847

 

Loss on rights for convertible notes

 

—

 

—

 

—

 

—

 

—

 

—

 

4,549

 

—

 

4,549

 

Gain on sale of subsidiary stock

 

—

 

—

 

—

 

—

 

—

 

—

 

(1,292

)

—

 

(1,292

)

Refinancing and extinguishment of debt and interest rate derivatives

 

1,222

 

—

 

1,222

 

5,378

 

—

 

5,378

 

17,423

 

—

 

17,423

 

Other (income) expense, net

 

(421

)

—

 

(421

)

(397

)

—

 

(397

)

(77

)

—

 

(77

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

112,186

 

(8,415

)

120,601

 

17,069

 

(34,778

)

51,847

 

11,360

 

(8,486

)

19,846

 

Income tax provision (benefit)

 

34,865

 

(25

)

34,890

 

20,872

 

(191

)

21,063

 

(2,125

)

365

 

(2,490

)

Equity in earnings of unconsolidated affiliates

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

77,321

 

$

(8,390

)

$

85,711

 

$

(3,803

)

$

(34,588

)

$

30,785

 

$

13,485

 

$

(8,851

)

$

22,336

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share - Basic

 

$

0.85

 

 

 

$

0.94

 

$

(0.04

)

 

 

$

0.34

 

$

0.15

 

 

 

$

0.24

 

Earnings (loss) per common share - Diluted

 

$

0.80

 

 

 

$

0.89

 

$

(0.04

)

 

 

$

0.33

(d)

$

0.10

 

 

 

$

0.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

91,299

 

 

 

91,299

 

91,231

 

 

 

91,231

 

92,258

 

 

 

92,258

 

Diluted

 

96,337

 

 

 

96,337

 

91,231

 

 

 

93,729

(d)

185,639

 

 

 

185,639

 

 

(a)          Represents the write off of the outstanding goodwill of the Europe segment.

(b)         Represents amortization expense related to the Pirelli license agreement.

(c)          Interest expense relates to the outstanding debt of the Europe segment that was assumed by the purchaser or retired as part of the disposition.

(d)         As the adjustments result in a positive net income for the year ended November 30, 2008, the outstanding potential common shares are no longer considered to be antidilutive and therefore are included in the computation of diluted earnings per share.

 

 


 

The unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended August 30, 2009 and August 29, 2010 are as follows:

 

 

 

Nine Months Ended
August 30, 2009

 

Nine Months Ended
August 29, 2010

 

 

 

As Reported

 

Adjustments

 

Pro Forma

 

As Reported

 

Adjustments

 

Pro Forma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

958,004

 

$

76,283

 

$

881,722

 

$

1,002,336

 

$

76,830

 

$

925,506

 

Cost and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

572,353

 

57,426

 

514,927

 

596,413

 

58,279

 

538,134

 

Selling, general and administrative

 

302,533

 

23,639

 

278,894

 

323,636

 

22,781

 

300,855

 

Asset impairment loss

 

—

 

—

 

—

 

22,963

 

22,963

(a)

—

 

Goodwill impairment loss

 

—

 

—

 

—

 

—

 

—

 

—

 

Amortization expense

 

2,435

 

2,220

(b)

215

 

522

 

306

(b)

216

 

Restructuring expenses and asset impairment

 

1,448

 

—

 

1,448

 

—

 

—

 

—

 

Royalty (income) expense, net

 

(12,186

)

—

 

(12,186

)

(12,343

)

—

 

(12,343

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

91,421

 

(7,002

)

98,423

 

71,145

 

(27,498

)

98,643

 

Interest expense

 

56,551

 

802

(c)

55,749

 

65,890

 

596

(c)

65,294

 

Loss on rights for convertible notes

 

4,549

 

—

 

4,549

 

—

 

—

 

—

 

Gain on sale of subsidiary stock

 

(1,292

)

—

 

(1,292

)

—

 

—

 

—

 

Refinancing and extinguishment of debt and interest rate derivatives

 

17,461

 

—

 

17,461

 

3,759

 

—

 

3,759

 

Other (income) expense, net

 

(60

)

—

 

(60

)

(161

)

—

 

(161

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

14,212

 

(7,804

)

22,016

 

1,657

 

(28,094

)

29,751

 

Income tax provision (benefit)

 

3,201

 

(386

)

3,587

 

13,619

 

149

 

13,470

 

Equity in earnings of unconsolidated affiliates

 

—

 

—

 

—

 

2,702

 

—

 

2,702

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

11,011

 

$

(7,418

)

$

18,429

 

$

(9,260

)

$

(28,243

)

$

18,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share - Basic

 

$

0.12

 

 

 

$

0.20

 

$

(0.10

)

 

 

$

0.20

 

Earnings (loss) per common share - Diluted

 

$

0.07

 

 

 

$

0.14

 

$

(0.10

)

 

 

$

0.11

(d)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

91,836

 

 

 

91,836

 

95,384

 

 

 

95,384

 

Diluted

 

153,602

 

 

 

153,602

 

95,384

 

 

 

287,895

(d)

 

(a)          This asset impairment charge was recognized related to the long-lived assets of the Europe segment.

(b)         Represents amortization expense related to the Pirelli license agreement.

(c)          Interest expense relates to the outstanding debt of the Europe segment that was assumed by the purchaser or retired as part of the disposition.

(d)         As the adjustments result in a positive net income for the nine months ended August 29, 2010, the outstanding potential common shares are no longer considered to be antidilutive and therefore are included in the computation of diluted earnings per share.

 


 

The unaudited Pro Forma Condensed Consolidated Balance Sheets as of November 29, 2009 and August 29, 2010 are as follows:

 

 

 

November 29, 2009

 

August 29, 2010

 

 

 

As reported

 

Adjustments

 

Pro Forma

 

As reported

 

Adjustments

 

Pro Forma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and equivalents

 

$

131,427

 

$

2,686

 

$

128,741

 

$

82,510

 

$

576

 

$

81,934

 

Accounts receivable, net

 

156,850

 

21,889

 

134,961

 

181,758

 

14,578

 

167,180

 

Inventories

 

56,810

 

10,548

 

46,262

 

68,634

 

12,510

 

56,124

 

Other current assets and deferred income taxes

 

41,302

 

709

 

40,593

 

35,285

 

484

 

34,801

 

Total current assets

 

386,389

 

35,832

 

350,557

 

368,187

 

28,148

 

340,039

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, at cost

 

446,989

 

68,295

 

378,694

 

416,354

 

35,858

 

380,496

 

Less accumulated depreciation

 

(239,508

)

(37,479

)

(202,029

)

(246,468

)

(34,072

)

(212,396

)

 

 

207,481

 

30,816

 

176,665

 

169,886

 

1,786

 

168,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

360,583

 

—

 

360,583

 

360,878

 

—

 

360,878

 

Intangible assets, net

 

1,937

 

—

 

1,937

 

1,517

 

57

 

1,460

 

Debt issuance costs, net and other assets

 

59,080

 

936

 

58,144

 

64,415

 

935

 

63,480

 

 

 

421,600

 

936

 

420,664

 

426,810

 

992

 

425,818

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

1,015,470

 

$

67,584

 

$

947,886

 

$

964,883

 

$

30,926

 

$

933,957

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ (Deficit) Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion - long-term obligations

 

$

13,693

 

$

10,134

 

$

3,559

 

$

7,634

 

$

5,326

 

$

2,308

 

Accounts payable

 

88,971

 

23,067

 

65,904

 

89,229

 

19,042

 

70,187

 

Accrued customer incentives and advertising

 

31,804

 

1,263

 

30,541

 

33,215

 

877

 

32,338

 

Accrued compensation

 

43,105

 

6,052

 

37,053

 

26,466

 

3,988

 

22,478

 

Accrued interest

 

15,230

 

205

 

15,025

 

17,616

 

181

 

17,435

 

Other accrued liabilities

 

36,436

 

2,094

 

34,342

 

32,617

 

2,279

 

30,338

 

Total current liabilities

 

229,239

 

42,815

 

186,424

 

206,777

 

31,693

 

175,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term obligations

 

833,766

 

7,868

 

825,898

 

794,658

 

5,517

 

789,141

 

Other liabilities

 

59,625

 

5,898

 

53,727

 

58,004

 

5,280

 

52,724

 

Deferred income tax liabilities

 

832

 

—

 

832

 

875

 

—

 

875

 

Stockholders’ equity (deficit)

 

(107,992

)

11,003

 

(118,995

)

(95,431

)

(11,564

)

(83,867

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity (deficit)

 

$

1,015,470

 

$

67,584

 

$

947,886

 

$

964,883

 

$

30,926

 

$

933,957